MLN Goes Belly Up.(Mortgage Lenders Network bankrupt)

MIDDLETOWN, CT -- Mortgage Lenders Network here, a $17 billion servicer of mostly subprime loans, filed for bankruptcy protection in early February, owing unsecured creditors $92 million.

As Mortgage Servicing News went to press, the company was in the process of trimming its servicing workforce and questions remained about how investors would react to the filing.

In late January, while MLN's finances worsened, the privately held company scuttled a deal to sell $3 billion in servicing on Fannie Mae loans. Fannie Mae, meanwhile, may transfer its servicing to a third party, according to industry sources. (Fannie declined to comment.)

Residential Funding Co., a unit of GMAC, recently told MLN it was terminating its right to service loans for RFC.

MLN officials have yet to comment on the bankruptcy filing which came shortly after National Mortgage News reported that Marathon Asset Management, New York, a potential investor, had pulled out of talks with the company.

Marathon was MLN's last real hope, officials close to the lender said.

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